We're 'doing better' since the pandemic: Raising Cane’s CEO

Raising Cane’s Chicken Fingers CEO Todd Graves joins Yahoo Finance’s Zack Guzman to discuss how the fast food chain is performing amid COVID-19, while taking safety precautions for employees.

Video Transcript

ZACK GUZMAN: Of course, we've been highlighting the way that different restaurants have been grappling with the pandemic. We saw indoor dining shut down across most of the country here. And some Americans have been trying to get accustomed to the new changes that we've seen play out here. No doubt the drive-through lane has been as busy as ever.

And for more on that and other changes being instituted to make this a successful recovery in the pandemic, we're joined by the founder and CEO of Raising Cane's Chicken Fingers. Todd Graves joins us once again on the program. And Todd, I'd like to say it's good to see you. But every time we have you on, I just want Raising Cane's and there's none here in New York for me to have.

But it looks like your guys' business has recovered to the pre-pandemic levels you saw here. How is that possible? And what have you seen in terms of making customers more comfortable and continue to deliver on what you guys set out to do through all this?

TODD GRAVES: Yeah, Zack, the last time-- whoa, we got some rain storm here in Louisiana. But the last time we talked, we-- Raising Cane's when COVID-19 and the pandemic hit, we went down immediately 30% in sales, which for a growing business like mine, you were just bleeding cash. And you're really in a bind. And 30% has been our number for dine-in and take out. And so when that went away immediately, we were down 30%, which is exactly those numbers and that format that our customers uses.

But then they quickly, over the course of about 30 days, shifted to go towards drive-through business. So about 30 days into the pandemic, we got our original forecasted sales back. And then from that point, we actually went up in sales that we had-- that we had originally forecasted pre-COVID.

ZACK GUZMAN: Yeah, and I guess it seems simplistic, but it's something we've talked about in terms of cuisine that holds up through this. I had seafood the other day. It was take out. It was garbage after it finally got home, We've seen Papa John's, Domino's shares up 40%, 50% this year.

I mean, chicken seems to be perfectly suited here, I guess, and we've seen the boost. It's been a year since the Popeyes-Chick-fil-A drama played out. I don't know if you're still seeing a boost from all that. But it's an anniversary I didn't realize we just passed two weeks ago. What do you think that maybe did to the idea of chicken being more popular for a family dinner in terms of the takeout options?

TODD GRAVES: Yeah, I think people are shifting towards the complete meal focus, right? And so it's not just a burger or sandwich at lunch and do something else for dinner. I think chicken's a great protein to do dinner as well.

And it was very interesting when Popeyes and Chick-fil-A went back and forth with the chicken sandwich, you'd think that would take sales away from other chicken competitors, like Raising Cane's. But it's actually, it's a rising tide lifts all lifts all boats. Everybody in the chicken category did better, because people were paying more attention to chicken, right? Our chicken sales went up, which was really interesting.

ZACK GUZMAN: And one thing we were discussing, kind of a debate before we had you on, was that you do have a sandwich on the menu, it's technically three chicken fingers on a bun. We were debating whether or not that's a sandwich or not. But what does that maybe-- did it spark any talks about menu innovation at Raising Cane's? I mean, you guys have a pretty concentrated menu here. What does that say about maybe the model and stresses that might be changed if you ever added anything to the menu.

TODD GRAVES: You're talking blasphemy to me. I'm the Raising Cane's chicken fingers, one love, that quality chicken finger meal. I haven't changed the menu since 1996. And we believe that Cane's should do one thing and do it better than anybody else.

And because we have that system, right, it's that cook-to-order system, we can get that food out with fast food speed and convenience, but with unbelievable quality. And when you start changing menus and messing with it, you mess up with your speed or you mess up in your quality. And it's working right now. So we're going to stick with it.

Actually, I like to offer that chicken sandwich to our customers, because some people just want that sandwich. But it actually takes us a little longer to make that sandwich. So I'm not really crazy about it being on our menu in the first place.

ZACK GUZMAN: Todd, when we talk about doing things and doing them well, I mean, we've highlighted so many businesses laying off workers through all this. You guys managed to not lay off any of your crew members, even as you saw hours cut. Now you're distributing more than $5 million in thank-you bonuses to your crew members. How have you been able to do all that when you think about-- I guess those thank-you bonuses would be making up for the lost hours-- but how is that kind of the right model for you guys as a business, maybe stick together through it and not deal with rehiring on the back end as you see business pick back up?

TODD GRAVES: Yeah, I have to say this-- we're actually doing better since the pandemic hit. We're not really happy about that, because we have this saying, someone explained it the other day-- survivor's remorse, right? We're seeing these other restaurants don't have the drive-through format just really suffering and closing.

But we think it's our mission and it is our privilege to serve our customers and have a great place for people to work. And so because of this drive-through format because our teams really rallied, we were able to go up in sales. And because of that, we were able to pick up a lot more crew members. We hired actually to the tune of 8,000 new crew members since the COVID-19 hit.

We were able to open 15 new restaurants during that time. We planned the 150 restaurants coming up here over the next year and a half. And so it's just taking advantage of the opportunity we have. And really, that's just what we should do. With other people lose their jobs at other restaurants, we should be hiring them.

But these teams are working exceedingly hard. They're working so hard. We're running quad shifts during the day, which means we have four different shifts of crew members, different crew members on each shift. So if one crew member on a certain shift were to catch COVID and be a potential spreading that through our restaurants, these teams don't interact with each other. So we can get another shift to go in and handle that shift while we quarantine the crew members.

It's very hard to do. Our managers are just really tired at this point. But we all believe it's our mission. And it's our mission to do this, because when we went into this and really during the first two weeks, we knew how bad it could get. We knew it potentially mean that Raising Cane's could have to furlough crew members, let crew members go.

And I just rallied around that call of no crew left behind. And it just came to me. And when you rally our team around a mission that's bigger than all of us together, everybody works so hard together, including crew members volunteered cutting their hours some so that everybody could keep their job. And then we were fortunate to get our sales back, and that's why we did the $5 million bonus to get everybody caught up, and then also get a little bit ahead.

ZACK GUZMAN: Yeah, which is very different than a lot of the other decisions that we've seen playing out here. But to the last point in terms of seeing your business pick back up, I'd be curious to get your take on maybe how some of these might be permanent shifts. If you are saying maybe people are more comfortable with the idea of chicken as a takeout order versus some of these other things, I mean, when dining eventually, hopefully, opens back up, what are you expecting to see in terms of how Americans might shift some of this? Because we've talked so much about now grocery orders going up and people cooking at home. But what are you expecting to see when things do return back to normal?

TODD GRAVES: Yeah, I mean, I think people are going to go back to dining rooms. You're seeing it. When anybody opens up their dining room to half capacity, they are full, right? I talk to fellow restaurateurs towards all the time. And they say the demand is there.

So I do believe people are going to go back into restaurants. But I believe they're going to go back to the restaurants that they have full trust that people are going to be CDC compliant with COVID-19. You're seeing it like crazy.

I think part of Raising Bane's success with our customers is they know there's a founder behind it. And they know I feel responsible. I feed people's children. I employ people's children.

And I think they're going to go to the restaurants that are doing the right-- the right thing they are with the health departments, et cetera, et cetera. I think restaurants that don't do it are going to not only keep closing now, they're going to close in the future. There's going to be new innovations-- plexiglass shields in the drive-thru, I think it's a good improvement to our business. You're going to see a lot of that stay.

Touchless payment is here to stay. Mobile ordering is going to do nothing but go up. People are going to not want to have-- they're going to want to limit their transactions where they have to actually touch hands and potentially spread germs between the two of them.

ZACK GUZMAN: Yes. No, it's very interesting take away, too, when we think about some of those other restaurants out there that have invested in very much those policies and those changes over the last few years, clearly paying dividends here as well. Todd Graves, appreciate you coming on, as always. Next time you come on, you've got to have one a little bit closer, because you can't drive to Boston for Raising Cane's every time here, man.

TODD GRAVES: I'm already looking for locations since the last time we talked. You're going to be pleasantly surprised the next time we talk. I'll have some good news for you.

ZACK GUZMAN: All right, I appreciate it, Todd. Be well.